DMP for £60k worth of debt...ready to tackle this!

fatbelly

stu12345_2 said:

you get a default letter saying account closed , credit agency notified.
then the next stage if you don't offer them repayment plan or the plan isn't good enough is a letter before action.

It would be unusual to receive a LBA that quickly on a consumer credit debt. Is that your experience?

Most debts never see court action and the ones that do usually happen a few years down the line.

After all they have six years to start a claim, and it costs money to do so.

stu12345_2

thanks, that was the order , as the OP asked what order do they come in, but I couldn't give the time scales between default and if a letter before action.

sourcrates

A fair number of posters seem to have the impression that legal action is a certainty once your account defaults, when really nothing could be further from the truth.

Although a default is the trigger for a creditor to be able to take action through the courts, by far the vast majority never do so.

The only reason debt collectors exist is so that lenders don`t have to go through the time and expense of legal action, which is why 90 odd % of defaulted debt is assigned to collectors or sold to debt purchasing companies.

Most of you will never receive an LBA, let alone have to have your case heard in court.

Of course there are always exceptions, lenders will take random accounts to task and go through the court process, peer to peer lenders and credit unions also tend to take a similar stance, but the rest get passed around, pillar to post, collector to collector, they can be sold on again numerous times, some accounts never have any action taken whatsoever, its all a numbers game to them, and appears to be totally random, but they always work on the principle of collecting as much as possible, for as little as possible.

bravo4_5

Hi, is anyone able to point me in the right direction for a letter template I would use to send to each creditor once the debt finally defaults?

I can’t seem to find one that fits my situation fro searching online.

Also what happens if the creditor doesn’t freeze the interest? Surely this would take forever to pay off the debt with a reduced payment.

Thank you 

13thlegion

bravo4_5 said:

Hi, is anyone able to point me in the right direction for a letter template I would use to send to each creditor once the debt finally defaults?

I can’t seem to find one that fits my situation fro searching online.

Also what happens if the creditor doesn’t freeze the interest? Surely this would take forever to pay off the debt with a reduced payment.

Thank you 

Interest is stopped when a debt defaults.

RAS

It's one of the reasons defaults are valuable, as interest should cease.

The other issue is that debts are then written down in the creditor's loan books. Perhaps sent out to debt collectors, or sold on. It's value depends on whether the debtor is paying peanuts or making a good contribution, as well as the creditors appetite for collection.

After a couple of transfers a debt may only be worth 10-20% of the original value. So many new owners can make a profit on say a full and final settlement on a 70% discount. That's when having some sort of "fighting fund" is worth it if your situation has improved a bit.

Note if the creditor set the original APR in the 30+% range, the debtor may have already paid back the capital sum before they default anyway.

sourcrates

bravo4_5 said:

Hi, is anyone able to point me in the right direction for a letter template I would use to send to each creditor once the debt finally defaults?

I can’t seem to find one that fits my situation fro searching online.

Also what happens if the creditor doesn’t freeze the interest? Surely this would take forever to pay off the debt with a reduced payment.

Thank you 

To what ends?

What do you want to say to them?

Usually creditors don`t hang on to defaulted debt very long, it either gets assigned to a collector, or sold to a 3rd party.

So you and your original creditor have nothing to say to one another, that`s the whole point of a default, it means the financial relationship between you has ended, nothing more to say.

Whoever is collecting that debt at the time will write to you, you don`t need to write to them.

bravo4_5

RAS said:

It's one of the reasons defaults are valuable, as interest should cease.

The other issue is that debts are then written down in the creditor's loan books. Perhaps sent out to debt collectors, or sold on. It's value depends on whether the debtor is paying peanuts or making a good contribution, as well as the creditors appetite for collection.

After a couple of transfers a debt may only be worth 10-20% of the original value. So many new owners can make a profit on say a full and final settlement on a 70% discount. That's when having some sort of "fighting fund" is worth it if your situation has improved a bit.

Note if the creditor set the original APR in the 30+% range, the debtor may have already paid back the capital sum before they default anyway.

Thank you - this is good to know!

bravo4_5

sourcrates said:

bravo4_5 said:

Hi, is anyone able to point me in the right direction for a letter template I would use to send to each creditor once the debt finally defaults?

I can’t seem to find one that fits my situation fro searching online.

Also what happens if the creditor doesn’t freeze the interest? Surely this would take forever to pay off the debt with a reduced payment.

Thank you 

To what ends?

What do you want to say to them?

Usually creditors don`t hang on to defaulted debt very long, it either gets assigned to a collector, or sold to a 3rd party.

So you and your original creditor have nothing to say to one another, that`s the whole point of a default, it means the financial relationship between you has ended, nothing more to say.

Whoever is collecting that debt at the time will write to you, you don`t need to write to them.

Ahh ok, I thought that once the debt defaults it’s at this point I write to the creditor about reduced repayments. But what you’re saying is the debt defaults, after this I now deal with DCA/3rd party to arrange reduced payments?

Is there ever a case where the debt defaults and the creditor doesn’t give the debt to a DCA?

MattMattMattUK

bravo4_5 said:

sourcrates said:

bravo4_5 said:

Hi, is anyone able to point me in the right direction for a letter template I would use to send to each creditor once the debt finally defaults?

I can’t seem to find one that fits my situation fro searching online.

Also what happens if the creditor doesn’t freeze the interest? Surely this would take forever to pay off the debt with a reduced payment.

Thank you 

To what ends?

What do you want to say to them?

Usually creditors don`t hang on to defaulted debt very long, it either gets assigned to a collector, or sold to a 3rd party.

So you and your original creditor have nothing to say to one another, that`s the whole point of a default, it means the financial relationship between you has ended, nothing more to say.

Whoever is collecting that debt at the time will write to you, you don`t need to write to them.

Ahh ok, I thought that once the debt defaults it’s at this point I write to the creditor about reduced repayments. But what you’re saying is the debt defaults, after this I now deal with DCA/3rd party to arrange reduced payments?

Is there ever a case where the debt defaults and the creditor doesn’t give the debt to a DCA?

Sometimes the debt collection will be dealt with internally first, other times it will be handed to a Debt Collection Agency acting on behalf of the original creditor, it can also be sold to a third party who will then attempt recovery, so yes there are cases where it will not be dealt with by another party.

Their actions can range from doing nothing, to asking for money to obtaining a CCJ and then enforcing it, where on that scale they fall depends on the lender and the amount and as SourCrates says the legal route is not a foregone conclusion. Unfortunately you are going to have to sit and wait, then see what turns up in the post over the next few weeks and months.